A quick note: Starting next week I’ll be unplugged and on vacation. So no articles for the next two weeks.

Financial models are meant to be used as good rules of thumb when making decisions. So simpler is usually better with highly complex, uncertain, and adaptive markets. Simplicity allows for flexibility in that type of environment.

But problems arise when people rely on models to make the uncertain certain or try to attain physics-like perfection. They get rigid complex models in the process. Continue Reading…

It’s an absolute certainty that anytime a portion of the market performs well, a new fund is created for it. It’s like clockwork.

There will always be a market for this stuff because the past returns look great and people love a good history of returns (no matter how short). Of course, I could argue it’s a contrarian indicator to stay away because the good returns were already made.

Now, ETFs make it even easier for the industry to mass produce these fad funds to take advantage of the latest hype. Case in point is the latest ETF creation for the FANGs – Facebook, Amazon, Netflix, Google, along with a few similar high performers.

All these new funds do is add to the confusion in fund land. Continue Reading…

A short post for a short holiday week. So here are two excerpts from a short article where Ben Graham describes the game of investing.

The first is Graham’s definition of value investing and how he views the future. The second is a reference I see often comparing Wall Street to a tournament of bridge players. Continue Reading…